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Interest rates in Canada have doubled and were only seeing a trickle of investors selling. I do agree that we have way too much investment in finished real esta

by adra 2y ago

Interest rates in Canada have doubled and were only seeing a trickle of investors selling. I do agree that we have way too much investment in finished real estate, which is only hurting consumers trying to get into a market. We've been a lot more strict with ownership transparency and clamping down on short term rentals, which is still too soon to see how significant the effects will be, but the big tldr here being that rates doubled and there's still not a high push to reduce prices (yet), so both sides of the market are holding out for better.

tossandthrow 2y ago
In December there was an expectation that the FED would do 7 interest rate reductions this year. Now we are down to 1 - maybe. I think a lot of people in the market are still holding on with a strong expectation that the interest rates will go down. Personally, I think high interest rate environments are better for most people - it compresses asset prices and adds more value to a salary. But it will take some years for that compressions to kick in again.
- adra 2y ago
  There's a huge difference in rates and how it affects markets between Canada and the US. I'd assume most US based loans have a lock in period of 25-30 years, but is basically unheard of to have Canadian rates locked in longer than 5 years for fixed mortgages. That means there's a bunch of mortgage renewals that will dramatically affect the amount of disposal income for these individuals that locked in low rates a few years ago. In the US, it's more about potential buyers holding out for cheaper rates. In Canada is more about owners that "suddenly" have dramatically higher servicing rates. It's not unlikely that people are paying 1000/mo extra post renewal.
  - tossandthrow 2y ago
    My guess is that Canada, like the ECB, are also influenced by the FEDs rates because, you know, FX.

by adra 2y ago

tossandthrow 2y ago

In December there was an expectation that the FED would do 7 interest rate reductions this year. Now we are down to 1 - maybe. I think a lot of people in the market are still holding on with a strong expectation that the interest rates will go down. Personally, I think high interest rate environments are better for most people - it compresses asset prices and adds more value to a salary. But it will take some years for that compressions to kick in again.

adra 2y ago
There's a huge difference in rates and how it affects markets between Canada and the US. I'd assume most US based loans have a lock in period of 25-30 years, but is basically unheard of to have Canadian rates locked in longer than 5 years for fixed mortgages. That means there's a bunch of mortgage renewals that will dramatically affect the amount of disposal income for these individuals that locked in low rates a few years ago. In the US, it's more about potential buyers holding out for cheaper rates. In Canada is more about owners that "suddenly" have dramatically higher servicing rates. It's not unlikely that people are paying 1000/mo extra post renewal.
- tossandthrow 2y ago
  My guess is that Canada, like the ECB, are also influenced by the FEDs rates because, you know, FX.